Regional News
NUSA DUA, Indonesia—As U.S. President Barack Obama arrives in Indonesia for a series of summits, Southeast Asia is hoping the U.S. will take further steps to tighten economic ties with the region, where U.S. trade and investment have been outflanked in recent years by China’s stunning economic success.
Mr. Obama is scheduled to arrive on Thursday on the resort island of Bali, where he will meet with the leaders of the 10-member Association of Southeast Asian Nations and participate in the East Asia Summit of 18 countries.
Asean leaders will be watching closely to see what concrete steps the U.S. is willing to take to encourage further economic integration with their region, which remains one of the world’s largest markets but has often garnered less attention than China or India.
The U.S., once Southeast Asia’s biggest investor and trading partner, has ceded pole position in the diverse economies of the area. A flood of Chinese goods, financing and investment has washed across countries from Myanmar to Indonesia, even as some of those countries have become more suspicious of China’s growing economic and military might.
“China, after being very successful at deepening economic ties to the region over the last 15 years, has recently become a regular source of stress in Southeast Asia” through more aggressive actions in the South China Sea and elsewhere, lifting the region’s willingness to tighten ties with the U.S., said Ernie Bower, senior adviser and director of the Southeast Asia Program at the Center for Strategic and International Studies.
Much of the focus of the many meetings this week will be connected to regional security issues, including what should be the best response to Southeast Asia’s view that China is increasingly impinging on its sovereignty with claims on parts of the South China Sea.
The region’s leaders and Mr. Obama are also expected to discuss recent reforms in Myanmar, and whether sanctions against the Asean member should be lowered.
The Asean regional group plans to make progress on forming the member nations into an economic community in the next several years by lowering tariffs and other barriers to trade among members.
It is also working to build infrastructure between the countries and make it easier for students, tourists and skilled laborers from the region to move from country to country.
Over the last 15 years, the U.S. has slipped from the largest trading partner to the 10 members of Asean to No. 4, as China shot up to the top position from No. 9, said Mr. Bower, who co-wrote a recent policy paper that outlines how the U.S. needs to become closer with the region.
Despite years of buzz about the billion-person economies of China and India, Southeast Asia is still home to much more direct investment from the U.S. As of 2008, Asean had attracted a total of around $130 billion in foreign direct investment from the U.S.—more than three times what the U.S. has invested in China and ten times what it has invested in India, Mr. Bower said.
Asean leaders are hoping the meetings this week, which will include heads of state from China, Japan, India and Russia, will help underscore the growing importance of their part of Asia.
“We want to launch the beginning of Asean’s enhanced role in the global community of nations,” said Marty Natalegawa, foreign minister of Indonesia, this year’s Asean chair.
With a total population of close to 600 million, Asean economies have been expanding at an average rate of more than 5% for most of the last decade. The region, bordering India and China, has a total gross domestic product of close to $2 trillion, bigger than India’s.
Investment from and trade with China has helped power the region’s growth as China has lowered trade barriers with Southeast Asian countries. Last year, progress on an Asean-China free-trade agreement further lowered barriers and boosted trade. The U.S. has been less proactive but many leaders in the region want it to be more involved in Southeast Asian growth.
One of Mr. Obama’s answers is the small but growing plan for a free-trade bloc called the Trans-Pacific Partnership, or TPP.
The TPP stitches together four countries that already have free-trade agreements with the U.S.—Australia, Singapore, Chile and Peru—with Malaysia, New Zealand, Brunei and Vietnam.
While the countries represent only 6% of total U.S. trade, other countries are already expressing interest in joining. That four of the original members are from Asean shows the U.S.’s growing commitment to the region, backers say.
Mr. Obama announced outlines of the deal over the weekend during the Asia-Pacific Economic Cooperation forum in Honolulu.
Analysts said the U.S.’s aim is to expand TPP and use it to increase trade with Asia and counterbalance China’s tightening ties with the region.
Asean leaders said they are interested in learning more about the bloc but understand that tough economic times and approaching U.S. elections make it difficult for the U.S. to pledge to open up its markets much more.
“When a superpower comes it brings a lot of its own agenda,” said Asean Secretary-General Surin Pitsuwan. “The U.S. is going through its own self-analysis right now about the wisdom of opening up everything.”
Write to Eric Bellman at [email protected]
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By: Eric Bellman
Source: The Wall Street Journal, Nov. 16, 2011
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